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How to Track a Purchase Price Adjustment Escrow
How to track a purchase price adjustment escrow is a true-up holdback ledger from closing through release, not the working-capital math itself and not the indemnity escrow. For each closed deal, log whether a separate adjustment escrow exists, the amount, which adjustment items it covers, whether it is the sole source of recovery for the true-up, the claim window, amounts claimed versus remaining, and release status. Raziel's working capital adjustment tracking page is the peg and the NWC true-up. Raziel's escrow holdback tracking page is indemnity dollars. This page is the cash box that pays the price adjustment.
This is not legal, tax, or investment advice. Raziel does not provide it. Copy the escrow agreement and the purchase-price adjustment article. Do not invent a 58% “market” escrow.
What this adjustment-escrow ledger is (and is not)
A purchase price adjustment (often a closing-date true-up of net working capital, debt, cash, and transaction expenses) changes the price after closing. An adjustment escrow is a separate pot of closing proceeds held to fund that true-up, as distinct from a general indemnity escrow. The ABA’s 2025 Private Target M&A Deal Points Study reviewed 139 agreements from 2024 and Q1 2025. Wagner Hicks, summarizing that study, reports that 90% of deals included a post-closing purchase price adjustment (down slightly from 92% in the prior study). Goulston & Storrs reports that a separate escrow to settle the post-closing purchase price adjustment appeared in about 58% of deals, up from 53% in the prior publication and the highest share since the Study began tracking the metric in 2006. Of agreements with an adjustment escrow, 42% specified that the escrow is the sole source of recovery for the post-closing purchase price adjustment, a path that has risen from 11% in 2017. Those are study snapshots. Your escrow agreement controls.
Seven columns on one adjustment-escrow row
Open one row per deal (child rows if more than one adjustment escrow, or if cash, debt, and NWC have separate pots). Attach the escrow agreement, the closing statement, and the later true-up statement.
Separate escrow or not. Whether adjustment dollars sit in their own escrow, in the indemnity escrow, or as an unsecured true-up. Goulston: separate adjustment escrow in about 58% of 2025 Study deals. Copy the vehicle. Do not treat “there is an escrow” as “it is the adjustment escrow.”
Amount and holder. Escrowed dollars, escrow agent, and whether the amount is a cap on the true-up, a source among others, or both. Store the wire date into escrow as a cash event on the deal.
What it covers. Net working capital, net debt, cash, transaction expenses, and any other named true-up. K&L Gates notes the 2025 Study added a data point on how often transaction expenses are taken into account in post-closing adjustments. Copy the listed items. Do not assume NWC-only.
Sole source or not. Goulston: 42% of deals with an adjustment escrow made it the sole recovery source for the true-up (11% in 2017). If the paper lets the buyer chase the seller for a shortfall above the escrow, say so. If it does not, do not book a receivable you cannot collect under the contract.
True-up window. Deadline for the buyer’s closing statement, seller objection period, and dispute path (accountant, court, or other). Missed clocks are how an escrow sits full while the adjustment is already deemed accepted.
Claimed versus remaining. Buyer’s proposed adjustment, seller’s proposed number, amount drawn, amount remaining, and any interest on the escrow. Update when a statement lands. Do not overwrite the original escrowed amount.
Status. Funded, statement delivered, disputed, partial release, full release, or expired. When dollars leave escrow to the buyer or back to the seller, book each movement with a date so MOIC does not treat a trapped holdback as proceeds.
Keep this escrow off the indemnity row
Do not paste the 58% figure onto a deal that used one combined escrow. Do not treat a working-capital shortfall as an indemnity claim against the holdback unless the paper says so. Do not release the row when the indemnity escrow later releases. The clocks are different. The beneficiaries are often different. The sole-source language is different.
When the ledger holds
The row holds if the seven cells are copied from the escrow agreement and the true-up statements (or marked missing). It fails when you invent an amount, mix indemnity and adjustment pots, or ignore a sole-source cap. Raziel's MOIC calculator is only honest if escrowed dollars have a date in, a date out, and a label. Raziel does not compute your NWC peg. Copy the seven columns.
